ZS Pharma To Get $2 Million From Texas

Fort Worth's ZS Pharma To Get $2 Million From State [Fort Worth
Star-Telegram, Texas]

From Fort Worth Star-Telegram (TX) (September 1, 2010)

Sept. 01--Texas is awarding $2 million from its Emerging Technology
Fund to a small Fort Worth company that’s developing
medications designed to eliminate life-threatening toxins in
patients with kidney disease.

The fund cut an initial $800,000 check to ZS Pharma Inc., and
will release the remaining $1.2 million once the company meets
certain milestones. In exchange, Texas takes an ownership interest
in the private company.

"ZS Pharma has been well-vetted, and we are confident that they
are going to be a very successful company," Bill Sproull, chairman
of the technology fund’s state committee, said Monday at the
University of North Texas Health Science Center. ZS has been
conducting pre-clinical research at the center and hopes to begin
human trials early next year.

The award announced Monday is the latest investment from the
technology fund, which the Texas Legislature created in 2005. The
fund, headed by the governor, lieutenant governor and House
speaker, has awarded more than $159 million to 113 early stage
companies and $161 million in grant-matching and research funds to
Texas universities.

ZS is doing research into medication -- taken in tablet or
capsule form -- that eliminates excess potassium, ammonium and
phosphate in patients who have renal disease.

The company wants to focus its zirconium silicate compound on
potassium and ammonium, toxins for which CEO Al Guillem said
there’s either no remedy or an inadequate one. Healthy
patients get rid of such toxins through their urine, Guillem
said.

In unhealthy patients, the zirconium silicate should expunge the
toxins, which patients would excrete in their stools, he said. The
zirconium silicate has shown no toxicity or other safety problems
in preclinical research on animals, Guillem said.

"It’s truly like taking something and mopping the GI
tract," said Guillem, who has a Ph.D. and 25 years’
experience in pharmaceuticals, at major companies and startups.

ZS, which Guillem co-founded in Indiana in 2008, began doing
initial research into the drug then.

As test data began to show favorable results, Guillem said the
ZS principals, including several who lived in Tarrant County or had
ties here, began to organize the company.

In January 2009, the company began approaching investors,
raising about $1.25 million toward a $3 million goal, Guillem said.
That round is still open, he said.

The company subsequently linked up with the Emerging Technology
Fund through the TECH Fort Worth business incubator and the
University of North Texas, and applied for an award.

ZS began running preclinical tests at the health science center.
And several months ago, ZS officially changed its corporate home to
Fort Worth.

"What attracted us was the programs that were here, the
infrastructure that was here," Guillem said Monday, after receiving
a ceremonial check during an event at the health science
center’s new Medical Education & Training Building in
Fort Worth.

"We could have gone through something similar in Indiana," he
said. "But being endorsed by the state of Texas, we thought
we’d get more validation in what we were doing."

UNT officials view the ZS partnership as another milestone in
the university’s campaign to support more research and become
a Tier 1 research center. Lee Jackson, the UNT System chancellor,
said recent initiatives that put cancer and Tier 1 initiatives
before voters and funded the Emerging Technology Fund contribute to
the development of "basic long-term science" in Texas and to more
immediate "market-ready technology and intellectual property
that’s close to translating into jobs."

"Texas has found a way to do both," he said.

ZS expects to file an investigational new drug application with
the Food and Drug Administration at the end of this year, Guillem
said.

The company also has more fundraising ahead, which will dictate
how much of a stake Texas ends up with.

ZS has more than 18 months to raise $500,000. If it
doesn’t, Texas would get a 20 percent larger share price than
other investors, Guillem said.

But ZS feels good about its prospects, Guillem said.

Taxpayers could eventually cash out under a number of scenarios,
including an initial public offering by ZS or a partnership between
ZS and a bigger pharmaceutical company, Guillem and Sproull
said.

Guillem also expects ZS employment, now at nine, to grow.

Scott Nishimura, 817-390-7808

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